Correlation Between Citigroup and Lekoil
Can any of the company-specific risk be diversified away by investing in both Citigroup and Lekoil at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Citigroup and Lekoil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Lekoil Limited, you can compare the effects of market volatilities on Citigroup and Lekoil and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Citigroup with a short position of Lekoil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Lekoil.
Diversification Opportunities for Citigroup and Lekoil
Excellent diversification
The 3 months correlation between Citigroup and Lekoil is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Lekoil Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lekoil Limited and Citigroup is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Citigroup are associated (or correlated) with Lekoil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lekoil Limited has no effect on the direction of Citigroup i.e., Citigroup and Lekoil go up and down completely randomly.
Pair Corralation between Citigroup and Lekoil
Taking into account the 90-day investment horizon Citigroup is expected to generate 3.27 times less return on investment than Lekoil. But when comparing it to its historical volatility, Citigroup is 5.38 times less risky than Lekoil. It trades about 0.11 of its potential returns per unit of risk. Lekoil Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.55 in Lekoil Limited on August 27, 2024 and sell it today you would earn a total of 0.50 from holding Lekoil Limited or generate 90.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.8% |
| Values | Daily Returns |
Citigroup vs. Lekoil Limited
Performance |
| Timeline |
| Citigroup |
| Lekoil Limited |
Citigroup and Lekoil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Lekoil
The main advantage of trading using opposite Citigroup and Lekoil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Lekoil can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lekoil will offset losses from the drop in Lekoil's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
| Lekoil vs. EOG Resources | Lekoil vs. Canadian Natural Resources | Lekoil vs. Pioneer Natural Resources | Lekoil vs. Woodside Energy Group |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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